Russian meat price transmission and policy interventions in 2014

Abstract

This article investigates price relationships in the Russian meat markets in 2011–2017. We use vector autoregression specifications to predict the transmission between consumer, producer, and import prices in the Russian pork, beef, and poultry markets. We consider the possible effects of substitution (between domestic product and import as well as between products in domestic markets), market protection in meat markets, short-term exchange rate policy, and trade price incentives. Our results suggest that meat producer prices responded to import prices, but not vice versa. Poultry and pork producers responded to all market protection measures—the ban of pork imports from the EU and the food embargo. Beef producer prices responded to the embargo. We also find that the single meat market segments may help predict price effects for substitutes. For instance, we find that the poultry consumer prices responded to consumer price changes in the beef and pork markets owing to assumed demand redistribution, but—in contrast to beef and pork—poultry consumer prices were not correlated with the lagged import and producer prices.